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Building on legitimacy theory and prior work on stakeholder management, we study firm Corporate Social Responsibility (CSR) communication in social media. In particular, we analyze the content of over a million microblogs on Twitter relating to CSR in the banking industry. We focus on key issues considered by banks in their CSR reports, which we classify into Core or Supplementary depending on their connection with core business activities. We find that the use of Twitter to communicate CSR information in social media suggests that significant differences exist between the information interests of companies and stakeholders. Outside stakeholders focus on Core CSR issues, whilst firm insiders are relatively more likely to communicate Supplementary CSR issues. Firm insiders’ information dissemination appears biased towards favorable information, and consistent with a legitimacy-based use of social media. Event studies conducted on dates with significant exogenous CSR news confirm the findings of ‘parallel’ talking, and no resemblance in the CSR issues communicated by firms and stakeholders in social media.

It is yet to be determined whether the firms’ operational inefficiency is reflected on the Corporate Social Responsibility (CSR) engagement approach. This paper aims to examine this association and specifically analyzes to which of the dimensions of CSR operational inefficiency is more closely related. Operational inefficiency is assessed using Data Envelopment Analysis (DEA) via dynamic inefficiency approach that accounts for the confounding role of adjustment costs related with firms’ investments. Using a sample of U.S. firms in a variety of sectors from 2004 to 2015, we find that lower dynamic inefficiency occurs in firms with a higher commitment to CSR activities. We also find that dynamic inefficiency is negatively related to firms’ engagement in social and corporate governance dimensions of CSR, whereas it is positively associated with the environmental dimension of CSR. In addition, dynamically inefficient companies have higher level of CSR concerns and lower of CSR strengths. The results are robust to endogeneity issues.

We argue that CEOs use narrative disclosure tone to assuage career concerns. In particular, we predict that more talented CEOs use a more optimistic tone at the beginning of their tenures to build a reputation of strong performance ability. We run our tests on a large sample of US firms’ 10-K disclosures, and show that highly able CEOs use a more optimistic tone early in their careers. Our results are robust to a number of alternative specifications. Overall, our evidence indicates that optimistic tone is used by CEOs to signal their superior performance ability. Firms with more optimistic disclosures present higher value-weighted cumulative abnormal returns around last quarter earnings announcements, and are more likely to access future debt, engage in greater future capital investment and pay more future dividends.

We investigate the relation between corporate social responsibility and auditors’ perception of internal control effectiveness under the Sarbanes Oxley Act, 404 Section. Previous studies find that the management or the quality of the board of directors is associated with the strength of internal controls. We contribute to the existing literature by identifying that the mechanisms managers use to improve the perception of internal control effectiveness are related to internally-oriented social responsible engagement and, in particular, to the enhancement of employee issues. We observe that corporate social responsibility strengths lead to an improvement of the auditors’ perception of effective internal control while corporate social responsibility concerns do not seem to diminish the perception of effectiveness. We also examine the nature of the weaknesses, which leads to adverse auditor opinions and note that, while the presence of company-level weaknesses is negatively associated with corporate social responsibility, the presence of accounting-level weaknesses is not. Moreover, we find that both the quality of information reported and corporate governance affect the relation between corporate social responsibility and the perception of internal control effectiveness. Our results hold for alternative proxies of internal controls and after controlling for potential endogeneity issues.

This paper analyzes whether managers combine two mechanisms capable of influencing investors’ judgments in earnings announcements. Specifically, we study whether managers use impression management techniques to emphasize non-GAAP earnings measures when announcing annual results. The study is carried out on an international sample of European countries, during 2003-2005. The method used is manual content analysis. We find evidence that managers use impression management techniques as a complement to the disclosure of non-GAAP earnings measures. Furthermore, our analysis of market reactions indicates that although investors recognize that non-GAAP earnings measures have information content they penalize firms that present these figures in combination with impression management techniques. Thus, investors seem to perceive the use of impression management to enhance non-GAAP figures as an opportunistic strategy and consequently inflict a penalty for this self-serving behavior.

Purpose – This paper develops a holistic measure for analysing impression management and for detecting bias introduced into corporate narratives as a result of impression management. Design/methodology/approach – Prior research on the seven impression management methods in the literature is summarised. Four of the less-researched methods are described in detail, and are illustrated with examples from UK Annual Results’ Press Releases (ARPRs). A method of computing a holistic composite impression management score based on these four impression management methods is developed, based on both quantitative and qualitative data in corporate narrative disclosures. An impression management bias score is devised to capture the extent to which impression management introduces bias into corporate narratives. An example of the application of the composite impression management score and impression management bias score methodology is provided. Findings – While not amounting to systematic evidence, the 21 illustrative examples suggest that impression management is pervasive in corporate financial communications using multiple impression management methods, such that positive information is exaggerated, while negative information is either ignored or is underplayed. Originality/value – Four impression management methods are described in detail, illustrated by 21 examples. These four methods are examined together. New impression management methods are studied in this paper for the first time. This paper extends prior impression management measures in two ways. First, a composite impression management score based on four impression management techniques is articulated. Second, the composite impression management score methodology is extended to capture a measure for bias, in the form of an impression management bias score. This is the first time outside the US that narrative disclosures in press releases have been studied. Not applicable The Accounting Harmonisation and Standardisation in Europe: Enforcement, Comparability and Capital Market Effects research project